The Federal Government of Nigeria is set to lose $4 million from a World Bank loan after failing to meet international auditing standards in a critical revenue reform initiative involving the Federal Inland Revenue Service (FIRS) and the Nigeria Customs Service. The funding was part of the $103 million Fiscal Governance and Institutions Project, which is a public financial management initiative supported by a credit facility from the International Development Association (IDA).
According to the World Bank’s latest restructuring paper dated June 2025, the revenue assurance audit covering the 2018 to 2021 financial years was assessed as unachieved. The Independent Verification Agent concluded that the audit reports submitted by the Office of the Auditor-General of the Federation did not comply with requisite international auditing standards, thereby rendering the $4 million performance-based condition unmet.
This failed audit was among ten performance-based conditions under the project that the Nigerian government was unable to fulfil before the project’s closing date of June 30, 2025. Consequently, the Federal Ministry of Finance requested the cancellation of $10.4 million in project funds. This cancellation includes $4.5 million allocated to the incomplete Revenue Assurance and Billing System, $1 million tied to the development of a National Budget Portal, and $0.9 million in uncommitted technical assistance funding.
The Budget Office of the Federation, responsible for the budget portal, reportedly did not submit any verifiable evidence of progress. The World Bank document explained that the proposed change is to cancel the $10.4 million, consisting of the $9.5 million allocated to performance-based conditions that will not be met by the closing date, and the $0.9 million in unused technical assistance funds.
This cancellation follows an earlier adjustment in June 2024, when $22 million was dropped from the original $125 million funding envelope, reducing the project to $103 million. With the latest cancellation, the project’s total financing now stands at $92.6 million.
Despite these setbacks, the World Bank noted some significant progress in other areas of the project. The government achieved notable improvements in non-oil revenue, which reached 153 percent of the 2024 budgeted target, up from 64.9 percent in 2018. This increase was attributed to the unification of Nigeria’s exchange rate, enhanced tax administration through the TaxProMax system, and reforms that enabled automated revenue remittances from ministries, departments, and agencies.
The project also surpassed its target for the publication of reconciled economic and fiscal datasets, releasing ten publications against a goal of six. In addition, there were advances in transparency and data reforms. The Corporate Affairs Commission launched an Electronic Register of Beneficial Owners, now covering around 40 percent of registered businesses. The Ministry of Finance Incorporated also released a National Asset Registry and improved its financial reporting.
However, performance in capital expenditure execution fell short, reaching only 50 percent against a target of 65 percent. The overall monitoring and evaluation of the project was also rated as moderately unsatisfactory.
The final disbursement for the project is expected to total $96.04 million, which represents approximately 93 percent of the pre-cancellation figure of $103 million. While the government’s inability to meet certain key conditions has resulted in financial penalties, the broader outcomes of the project reflect a mixed performance that includes notable gains in revenue generation and transparency, albeit with lingering institutional and implementation challenges.
